tv Fast Money Halftime Report CNBC January 22, 2014 12:00pm-1:01pm EST
>> we saw the employment rate come down even though productivity down the road we never know. must take a leap higher on the machines. meantime, a big hour is coming up here beginning in a few seconds with scott wapner, by the way, scott, has carl icahn? >> we do. off the news of his most recent tweet, carl. just a short time ago saying that he's upped his apple stake now worth $3 billion. also we're going to talk to him about his intepgss. as you know, he's called for the buyback. first $150 billion. now 50. we're going to find out exactly what he thinks is going to happen and what happens if he doesn't get his way? maybe that's the most interesting thing. >> i could think of other questions he might get to. take it away. >> thanks so much. welcome to the "halftime" show, following the biggest stories on the street today. the secret to beating the market. the man who wrote the book is here. joel greenblatt reveals the latest. we are debating cnbc's first 25.
big blues, does ibm's busted earnings mean bad things are ahead for stock and technology at large? yes, carl icahn will also be joining us to talk about his increased apple position and so much more. wee let's meet today's starting lineup, pete najarian and courtney reagan as well, covering retail as all of you know, better than most. bummer day, i mean -- >> i know. >> you can go down the list. coach, sears closing the chicago store, target cutting haeflealt care for part-time workers. retail is down right ugly. >> they said holiday sales up 3.8%. i don't understand where that came from because coach of course one of the biggest bummers of the day. we know they missed on earningses from top line to bottom line.
they're going through this reinvention supposedly with both the brand and management team. i don't know. i'm not sure what i think so far. things are taking a hit and they have been sliding as well. >> how would you characterize right now, trying to gauge what the consumer is doing. these guys are trying to make trades based on the consumer. folks watching discretionary stocks have a good 2013. what are we to think now? >> consumers are buying but buying select vly and they're doing a lot of prebrowsing and window shopping online. when they go to the store they're going with intent. they know exactly what they want to buy. they're making fewer trips. i think that retailers need to make sure their online presence is very strong, that it presents that inventory so the shoppers know what they can get, where they can get it. and i think what we're losing a little bit online is impulse purchases because i think you go, buy what you want and check out. you don't wait in line. you don't see that extra stuff on your way or make your way through the racks to get through
the clearance on the back. >> i don't know. the online places now, you buy one thing and they give you is suggestion so you don't have to walk to the back of the store. >> amazon does. i don't know how well it works for the other retailers. >> how are you guys playing this? >> amazon is an interesting point because 800 pound gorilla, it's an 8,000 pound gorilla. nobody can compete with amazon at this point in my opinion. if you want to talk about the consumer and if the consumer is spending, let's look at the credit card companies, the numbers from american express, the action in visa, mastercard which just split today. so i think the consumer is spending. i think certain names like target, we talked about it a few weeks ago, i think they have huge headwinds in front of them after this big -- we'll call it a scandal now at this point. i think target canada is going to be negative. new lows on tar get. i think it's continues to drop. >> the problem is what retail stocks should we be buying? what one should we be selling? >> you should be buying the ones that have the best presence in the e-commerce.
when you look across it, who is having success? >> amazon is the obvious one. >> amazon is obvious. another one. >> under armour. nike does as well. both stocks have done well. under armour, because the fact that lulu struggled and it got in the female market in a big way,that combination with the e-commerce, when you look at those two names you're talking about names that fulfill people when you talking about the online world. you've got to have that connectivity for people. >> to that end, i think brands resonate more so than a jcpenney or macy's. you're going after under armour. >> i don't buy that. may i si's management resonates. macy's has done well. >> with investors. >> actually the company has done well in terms of same-store sales. growth has been good. i think where you have to stay away from are the trendy names like coach was, like abercrombie was. when they're on the downside, popularity, that's the issue. the only troubled retailers have had issues. poor management like jcpenney or
sears, or -- >> lulu, right? lulu product problem, management. >> i think you've got to look at if the best of the best and the best of the best between macy's, of course, the next best of the best is t.j. maxx. tjx is down 7% year to date. it's down as much as target. that's telling you that consumers are not going out as much, whether it's online or whether it's walking in the stores and i believe it is the walking into stores that it's hurting them so much. a lot of it is probably weather related, judge. we've had several storms that that have impacted sales over the last 30 days. we're just having another one right now. i guarantee sales, people will be talking about this storm on the east coast as far as an excuse two weeks from now. but if t.j. maxx right after christmas when they get all of that stuff dumped on them, court, and they still can't put up numbers that's tell you broadly consumers are not coming in the doors in the numbers they need. >> they don't really have an
online presence or online strategy right now. >> they're building it though. >> they are bed building it. >> i don't just mean building it, they already have it. >> people are starting to use it. they're just not used to going on to tjx.com to buy stuff yet. >> okay. bottom line, right? the inflexion point clearly was late '13 into '14 in terms of brick and more or taking a backseat to online. no more evidence than ups. >> right. >> for example, of that. that's the story. that's where the story is going to be. >> it is. retail is going to change from here on out. it's going to be different than what we have seen in years passed and people are going to get left behind. i think it's just the fact. >> courtney reagan on retail. let's hit our trader blitz now. four trades on four stocks making news today. first up is ibm, shares falling after earnings failed to impress investors again. doc, it's like a broken record. >> right. >> fourth time in a row they
missed on the top line. why do people keep giving them the benefit of the doubt? >> make or break for virginia, the chairman over there. i think she's running out of rope. they gave her enough to hang herself. now if they can't get this server unit sold -- >> low-end server in is a cloud problem, is it not? facing increased competition from even amazon. amazon is in retail, it's disrupting ibm's business. >> amazon is its own cloud. rack space and others are hemorrhaging because of what aerks ws, amazon web services, has done. ibm is right in the crosshairs here. they've got to make some moves, the correct moves, judge, over the short term or this stock sees 160 sglz what does it mean for ibm and from here forward and technology in general? >> zero. >> zero for technology. >> because if you look at last year, 2013, what did ibm do? absolutely nothing, right? meanwhile, the nasdaq flew to the upside. i think you've got to understand that what's going on in technology right now you guys
mentioned it. it's cloud. look at the clouds. look at vmw. not only acquisitions but that stock is trading knicks to 52-week highs. look at the other areas. it's about security right now, scott. if you want to know where is the heat right now in the world of technology, security names, that's the f-5s, nqs. all of these names are in the news. >> let's in the forget also that biotech for a large part carried the day for a good part of what the nasdaq 100 did last year and why it's off to another good start. some point old tech has to perform. >> it doesn't. it's a commodity business. ibm is a two commodity business, actually three. software, hardware, and consultant. all commodities. the pressure is going to continue. >> last thing, look at western digital. talk about old technology, they're flying. >> we'll do that. next up, freeport mcmorran seeing the fourth quarter earnings fell nearly 5% despite
higher revenues. >> yeah. so here's the stock, okay? it's dependent upon china. no matter what they say they're trying to paint china as being positive if spending will continue. i don't believe it will. chi china's economy continues to atrophy on both sides. consumer side except for the very high spenders. i just don't see any commodity stocks doing particularly well this year with the exception of oil may bounce. i would stay away. >> defense, textron topping earning's estimates by a penny. revenue beat. however, the company is giving a cautious outlook for the current quarter. pete? >> people are able to shrug this off. the stock is moving to the upside in a big way. i think people are looking at this, looking at the pe, they're looking at the cash and they look at where are they struggling right now? industrials are struggling a bit. great with the air when you look at the helicopter segment. doing a fantastic job. >> we're going to talk more about apple ahead because carl icahn made bugg big news today, tweeting about a $500 million
increase in his position. we're going to talk to carl on the other side of this break about his bet and his other investments as well. we'll be right back. [ tires screech ] [ car alarm chirps ] ♪ [ male announcer ] we don't just certify our pre-owned vehicles. we inspect, analyze, and recondition each one, until it's nothing short of a genuine certified pre-owned mercedes-benz for the next new owner. [ car alarm chirps ] hurry in to your authorized mercedes-benz dealer for 1.99% financing during our certified pre-owned sales event through february 28th. female announcer: get beautyrest, posturepedic,
bulldog: mattress discounters presidents day sale! get a queen-size sealy gel memory foam mattress for just $497. and get four years interest-free financing on the entire tempur-pedic cloud collection. [yawns] welcome back. carl icahn making business news again today tweeting that his added to his apple position.
he join bs us now on the fast line in a first on cnbc interview. carl, welcome back. >> good to be back. >> a series of tweets. i've got everybody's attention today as they usually do. you say you've kept buying apple since the stock was at 468 on august 13th. you have increased your position now to $3 billion. why do you keep buying apple, carl? >> well, i think apple is about -- you know, scott, i think, to be very successful investors, look for these no brainers. you don't get a lot of papers. you don't have to go through all this great technology to tell you what a no brainer is. and, you know, over the years even this year, you know, it was a no brainer. chesapeake actually was. forest lamp was. this was a -- just talking to
2013. apple ranks right up there in these no brainers. and the point is that you don't have to be a genius in technology to understand that, you know, apple is sell 20g 14 consensus of nine times earnings and amazingly the s&p is selling at 17 times earnings and apple is really growing. i mean, it's sort of amazing to me that it's just not picked up. you know, apple is a culture. you know, they've got a great eco system. they've got to be doing 42% of these studies show of this great growth category. you know, in the cellphones, handheld vistas. they keep coming out with -- i wouldn't say revolutionary products but evolutionary ones. >> right. >> and they proved a point here this year by these new products that they have of keeping their pricing. so you don't have to be a genius. i mean, i just say it on the back of an envelope. now, what bothers me a hell of a
lot and this is what i've been saying about corporate america, the problems with corporate america, is that the decisions they use are cash order of $150 billion, just sitting there, jut just sitting there doing nothing and not use it to do a huge buyback. i think is sort of disgraceful. i think it's doing a tremendous disservice to the shareholders. the largest shareholders, guys like me, i'm talking against myself, i should thank them because i'm able to bye stock cheaper than if they went out and used that money to buy back stock. so you have a board. i want to make it very clear. not in any way criticizing the way management has operated apple itself. i think they're doing a great job. i criticize the board for not going in and making this decision and there's nobody on that board that has real finance
experience. and then to say, well, we're going to take -- we're going to rely on some investment banker to tell us we shouldn't be buying stock back or more stock back is ludicrous. >> we discussed this last time, i think, carl. you do have seasoned people on the board. i mean, people have run companies -- >> playing tennis doesn't mean you should go give advice on brain surgery. i'm being facetious. they're seasoned people but dls there's no one on there that's really a finance guy. i think they would say they come up with investment backers they go and rely on and one of the troubles i've come through is the investment bankers are great guys but on stuff like this, board shouldn't be micromanaging on what type of an iphone to build but he should be having people listening to guys like me, the shareholders,and at the risk of being a minor, i think i
have one hell of a good record on telling you how to use your money how to investme it. >> there's no arguing with that. >> why don't they listen to some iks tent? and i'm making a more a universal point here. this is one of the troubles with our economy. and apple in this one area is quintessential example of it. >> let's talk specifics. you bought $500 million more over the past couple of weeks. that's what the other tweet said. >> yes. >> what cost are we talking about? >> well, i tell you myself i don't have it in front of me. in this area, in this area, i believe, you know, i mean, look, i think it's very cheap. i believe the company is a no brainer and i think it's going to -- if you look back -- look, when we came out with it it was 130 points cheaper than when we tweeted our followers in august. i think we bought it maybe a little cheaper than this. but not much. the 500 -- we've been buying
since we tweeted. so we're up to $3 billion. we bought a couple billion since we tweeted problem. >> this is your biggest position now, yeah? >> i believe it might not be if you counted the refineries and everything. i would have to look at it. probably is. >> we haven't spoken with you and we really haven't heard from you publicly since apple filed a proxy on a number of issues but also responding to this proposal that you had. you initially called for a buyback of $150 billion. then you reduced it to 50 billion. that's where you went initially. >> yeah, it's a minimum. >> why the reduction? >> womeell, you know, we talked a few big holders. frankly, apple is a culture. look, we think they should buy more than that. but, you know, 50 is a lot better than what we -- what
they're doing. and what they're doing i think is ludicrous and not really picking up right now. my hope is that tim cook has said and i respect tim cook a great deal and he said he's going to go out and take to the shareholders and get their opinion. i'm hope that we get a good vote here, you know, over 50%, and they'll listen to them. i don't really think that the major shareholders are ready to, you know, go in and say let's do $150 billion. i would be. and -- but that's not the point. the point is that it just is a sad commentary on -- i know you don't want me to get into generals but the same commentary on our economy. our economy isn't all that great. bernanke has saved the day with our economy, in my opinion. and right now you need more -- you should not have this divorce between management and owner ship. >> right. >> the large institutions are
coming around to that very relationally but still coming around. >> so apple, you know, filed this response. they've basically given you the regulatory version of go pound sand. they say that they're for the most part not going to do it. what do you do? >> let me put it this way. yon what they really said. they've koncome out and pretty h said they're going to discuss this at the beginning of the year with their -- with their shareholders. and i hope that they come around to it. hey, look, i got the tell you something and i know it sounds perhaps a little corny and a little self serving but i'll tell you this. as far as i'm concerned i'm actually -- and i know some people are going to laugh and scoff. i'm actually better off to do nothing because it gives me an opportunity to buy more stock and i intend to buy more. i'm not telling you i'm going to buy it tomorrow. i intend to buy more stock. it's almost better for me if they do nothing.
i think they're doing a great disservice to their other shareholders. what annoys me is you still have the board knows what's better for you than you do but they don't in the finance area. i'm not presumptuous enough to go to apple and said, you know what, i think so the 5s should be built that way. to tell them what they should do financially, one of their large holders, they should be listening to you. and i want to tell you it's a unique situation for me. i think this company is one of the great no brainers of all time. i hope i'm right. but i will say this, that this is more of a really philosophical question for me. and from a financial point of view, some people scoff at me, i'm almost better off if they don't do it because then i can buy more stock. that's the whole point. >> let me ask you this. realistically. even know that your stake is $3 billion, it's still also than
1%, i believe, of the shares outstanding. >> it might be a little bit more. okay. >> for argument's sake, it's around there. >> yes. >> what kind of leverage do you really have? >> no, i mean, this is not -- there are a couple of companies like this. we are we have no leverage sfoors ownership here. this is not one where we can own 10%, 12%, we can buy more in the six months or a year and might be able to get on shareholders to join us or some type of consortium. but basically -- and even that wouldn't matter too much. the point up trying to say is let's talk -- let's talk about where this country is going and why we allow the corporate governance to be so dysfunctional and why that's so bad for this country and why you have i think many of the problems stem from mediocre managements. in this case you don't have mediocre management but you have
a board that -- that is sort of, in my quote, a superior board and that is another great problem for this country. >> right. >> that's what i'm sort of saying. >> so when was the last time you spoke with tim cook? >> i'm not going to go into that. look, tim and i, we're not putting stuff, you know, that's something i don't want to go into at this point and i'm not going to do it. you know, we met and that's what i'm going to say. we met, you know, and talked. and i have a good relationship in my mind with him and i hope it stays that way. >> you made it clear, you're going to push this. you're not going away. >> listen, listen, i never shied away from one of these fights and we're not here. while i respect these guys, you know. you know, what they're doing, managerial sense, i don't respect, but you can be sure that in a day or two we're going to come out with a strong letter concerning it, pretty much what i'm saying here and we're going continue to fight it.
now if we lose we lose. from a financial point of view, as i said, it might be better for large if they don't do this but i think it's very -- to be -- shows lack of judgment not to do this at, you know, look, we're in a company and we like to see them do it and we like to get away from this superior board and i hope that tim is saying, and i i believe him, that hess going to listen to the shareholders. i think if the shareholder rs come out and vote for this regulatory, i think he will do something. if they don't, well, so be it. it's just one of these things that i think is wrong from a point of view of the economy in general. >> so you're going to send a new letter, release a letter but release a letter by sending -- >> my letter will be out to the shareholders and followers at twitter. by the way, there's going to be another -- okay. you like these little tidbits. in the next few weeks there's going to be another big one that we're going to be talking about. >> don't tease us like that,
carl. >> my twitter followers will see it first probably. >> you're a big tease now. >> okay. i like to tease you. i like to tease you because you come back at me with all of this stuff. asking all of these questions. might as well. it's not a tease. news for you. you like news. i'm giving you news. >> i do. so do our viewers. that's what we do. >> that's what i'm giving you. >> let's get some more. what are your intentions with hertz, carl? what are you going to do? >> i'm going to tell you something. i never said i own hertz. >> i know. but -- >> i can't help it what people say. look, i -- you know, i'm amazed that everybody comes out with all of these comments without even discussing it with me. i mean, you know, hey look, i really like david faber. i think he's a great guy and he said call. but how in the heck do you keep coming out and saying i'm going to do something when you never really talked to me on the phone? >> i don't know. faber has good sources. >> david is a great guy.
i'm not arguing at faber. but i'm saying that it's sort of funny to ask what i'm doing with hertz when you don't even know if i'm own it. >> i'm trusting the fact that you do own it so what are your intentions? people want to know. are you an innocent bystander? they did the pull because of you. >> i'm really as a shareholder democracy but i don't think if i do for cnbc, you know. >> i mean, look, they did the pill because of you. they're worried about you. what should they be worried about? >> how do you know they're worried about me? >> carl, come on. >> seriously. somebody come out on b cnbc and says i own the stock and i'm going do something, how do you know that's not some shareholder who wants to see the stock go up? you know, i told you a number of times, scott, that hey, don't take this the wrong way but people use cnbc and use me to say i got something perhaps when
they want to sell it. >> people will question everybody's motives including yours, carl. >> i'm going to say something here and maybe my lawyers will be mad at me for saying it. but i think you're going to be very surprised when february 14th comes and you don't see carl icahn there. not saying that won't be there, t not saying i am, not saying anything else. but i think we can have a discussion then and then maybe people will stop saying i'm doing this and doing that without me -- if i want people to know what i'm doing it go on twitter and tell my followers about it. i won't go how i wish to do it with you, scott, and i love you guys and all that. i don't think it should be cnbc telling people what i'm doing when they could be very wrong and i will tell you this, i'm not saying anymore, i think on february 14th when i think the date to do the hertz proxy comes up, you might be talking to me and saying, carl, i guess i shouldn't have said, i know you
are doing something here. >> look, i mean, the thought here is because the structure of your transaction in hertz is what it is that there wasn't the kind of filing that everybody would typically find. >> how do you know what my structure is? >> i don't know. >> how do you know what it is? how do you know -- ask you this question? >> yes. >> i'm not saying i don't own it. i'm not say i do own it. how do you know? >> i'm going with what my guy faber reported. let's move on. let's move on. >> i think you should. >> let's move on. forest labs, big win, right? new ceo -- >> i think -- i think forrest labs proves what i've been saying for years and years and years. corporate governance is dysfunctional and when you get into a company and when you do something in that company and do changes, look at the return on forest labs. it took them a few years but what is it up? you know better than me.
50%, 60% this year. it was there all the time. you haven't changed a hell of a lot except to go in and clean up the company and do a few things. i tell you this, i think brent sanders who he put in is doing a great job. it doesn't mean i don't like harold, he's a good guy. but he didn't change there. and i think he might, you know, we're still friendly. i think he might even be pleased himself for what's going on. >> let me ask you one more stock before i want to get to something else. netflix reports tonight. it's been a tremendous winner for you. you sold some stock in 2013. what's the state of your position as we talk today? >> well, you know, we sold some stock. we still own a fair amount. you know, i think we took a fair amount of chips off the table, maybe half. but i will say to you, i think netflix is a great company. i think it's got excellent
management. i think, you know, like anything, i mean, you know, the stock increased quite a bit. we were very extremely pleased with it. you know, my son and they brought it in and they have done a great, great job and they like it more than i do obviously. but i will tell you that i'm more of a value guy. when i say value, numbers guy. >> right. >> you look at apple and nine times earnings i love something like that. you look at a netflix, it's great. great concept. and, hey, i still like it quite a bit but you're asking me, i mean, if you want to talk to my son and his father, they give you maybe more exciting -- >> we're going to have a con dprens call. put brett and schecter on. we can all chat. >> okay. >> twitter do, you own twitter? do you own twiter? >> i don't own any shares of
twitter. i like twitter. i think twitter is great because you can get something out now to the public. by the way, when you can do that and disseminate information like you can on twitter this is what has changed the world and brought on the industrial revolution, the printing press. getting it out hopefully will change corporate governance one day because shareholders will begin to understand what the hell are we doing here? why are we letting somebody run the company that sometimes do great, great boards around, but sometimes they're t not doing their jobs and why do we just sit back and let them do it and we have a -- i think, a somewhat of a dysfunctional system. it makes me a lot of money but it's going to hurt this country if it doesn't change. i think twitter serves a great purpose. >> you've done well. we know that. iep had a great 2013. we know that as well. before we let you run, let's have some fun real quick. 25th anniversary at cnbc. we've compiled a list of 200
newsmakers and otherwise over the past 25 years and we're trying to narrow that down to 25 as cnbc 25. first 25. i want to ask you a couple of things on some names and i want your input. if you had to pick, for example, a sarnd difficult while or jamie dimon in that business, who do you think has had more of an impact? >> you're putting me in a hell of a position. >> you're on the list, too. who is on the list? >> you are. >> i hope they say something nice about me. i'm not going to say anything bad about jamie dimon or sandy weill. >> who do you think has had more of an impact over the past 25 years? this is simply who you thinks has had more of an impact. >> that's a great question and i would have to think about it. they both have had tremendous impact p and i would have to really think about that.
and i'm not trying to avoid the question. i would have to think about that for an answer. >> let me ask you one more in your wheelhouse, if you will. bob krandle versus herb kelleher. >> they've both made impact. in different ways they both made impacts. i think -- i mean, it's very hard question. i mean, i might be able to talk about that because i do know that and i have an opinion on that. but ypt to bring it out now. >> all right. well, other tease. >> that one i have more of an opinion on because i have a definite opinion on that. but i would rather bring that out in -- >> carl, congratulations on your great 2013. we know you've had a good year. thanks for spending thyme with us today talking about apple and almost everything else under the sun. we appreciate it, as always. >> okay. good talking to you, scott. >> all right, carl.
cozy or cool? "meow" or "woof"? everything the way you want it ... until boom, it's bedtime! and your mattress a battleground of thwarted desire. enter the sleep number bed. designed to let couples sleep together in individualized comfort. he's a softy. his sleep number setting is 35. you're the rock, at 60. and as your needs change over time you can adjust your bed to sleep better together. 48-month financing available through february 2 only at your local sleep number store. find your sleep number setting and know better sleep. over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95.
welcome back. we are just getting off the phone with carl icahn talking about apple, about hertz, about a number of other different topics including the cnbc first 25 which we'll get to in a moment. but do you want to react? >> my first reaction would be on apple. i know carl has been pressing the point for a long time about using this cash to put it in a form of buybacks. give it back to everybody. i don't agree with this. i know a lot would do this but i
want to see apple use that cash for acquisitions. i want to see them do it in a growth way, not necessarily just putting it right back in and giving it back to the shareholders. >> they have more than enough cash so i think -- >> where is that cash? it's overseas. let's figure out the tax implications. >> how many companies have $50 billion mark down is not going to dill lewd the company completely. >> i'm with you. >> i'm just saying here on twitter it's not golden when it comes to the board not giving any explanation for why they're just holding this much cash. he slount be able to bully them and they should do what they want with the cash but they have to have some plan. at one point, you know, $150 billion or $200 billion worth of pay. that's no plan. and they've been buying back
stock. >> ore than that that. what is their plan? none of us on this desk could tell you what their plan is for that cash. if they're going to just basically say this is a dictatorship, we don't have to listen to anybody else, then that's what carl's reeling against. i'm supporting him on that. >> ultimate motive. to this point, we don't know. >> it's a very unpower like trade, too, isn't it? buying it on the highs like that? if you listen to the hedgies in there, everybody is. >> this is the airline plan, consolidating business, if you believe the economy is improving it's a perfect play for murphy is involved in this stock. >> the stocks that had a big run but i think steve hit the nail
on the head. the stock can go higher. >> bounce nice, too. >> let's go back to the celebration we are having here, 25th year anniversary. "power lunch" has been instrumental in helping form. we just talked to carl about it. >> he's on the list. >> i don't believe in big speeches but i'm honored, thank you. >> what happens if you don't make the top 200? are you going to be okay? >> i'm okay with it. >> 201, it might, you know. >> getting down to 25 is going to be really, really hard. >> what we did, folks, is we took a whack at a first 200 list. and now this is where you the you videoers come in because over next few months we hope you will go on cnbc.com and find it there, the contenders, where you can go and click on the 25 out of the 200 that you think have been the most disruptive, the most influential, the most important people in changing business, in leadership, and maybe in the products and services we consume. you know, we took our first
whack but we also had help in trying to both expand that list of 200 finalists and whittle it down a little bit. we have a blue ribbon panel of advisers including paul steiger, jeffrey sonnenfeld, familiar face to some of people at cnbc and yale, and herminia ibarra. >> so one of the combinations that we wanted to debate because i thought it would be fun, jobs versus bezos? steve jobs and everything that he has done, i think it's too easy to fall back and say definitely jobs. >> i don't. >> why? >> i think jeff bezos is one of the only people to put up against steve jobs and not have it be a blowout. the main reason i say is that jobs did and kind of he's no longer here, his story has been
written, bezos is still running amazon and amazon is a great company and great competitor but i think the iconic level that steve jobs reached, bezos hasn't come close to. >> like manning versus brady. you can't go wrong with either one. most transformative iconic people that have disrupted industries. i take your point though. i think jobs disrupted three and arguably four industries. he disrupted computing, he disrupted the music business and i think he disrupted retail through -- he may have been the best of his time. >> impact on pixar and things like that. >> pixar and things like that. again, these are the debates that make this all so much fun. >> i may just take bezos. >> icahn versus steve cohen. >> they're guys who keep score. >> icahn. >> on their score you have to go with icahn. >> if it was purely on who is the most interesting it's icahn. >> no arguments. >> we just heard that.
we're going to come back right after this. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim from td ameritrade. is your tv powered by coal? natural gas? nuclear? or renewables like solar... and wind? let's find out. this is where america's electricity comes from. a diversity of energy sources helps ensure the electricity
we need is reliable. take the energy quiz. energy lives here. for what reality teaches you firsthand. in the face of danger, and under the most demanding circumstances. experience builds character. experience builds confidence. and experience... has built this. introducing the 2014 glk. the engineering and the experience of mercedes-benz. see your authorized dealer for exceptional offers through mercedes-benz financial services. female announcer: it's time to make room
female announcer: for the new mattress models, but sleep train's huge year end clearance sale ends sunday. get beautyrest, posturepedic, even tempur-pedic mattress sets, at low clearance prices. save even more on floor samples, demonstrators, and closeout inventory. plus, free same-day delivery, set up and removal of your old set. don't wait! sleep train's year end clearance sale ends sunday. superior service, best selection, lowest price, guaranteed! ♪ sleep train ♪ your ticket to a better night's sleep ♪
welcome back. joining us now is joe greenbl t greenblatt, the creator of magic formula investing. well-known author. a little book that beats the market, a little book that still beats the market, secrets of beating the market, et cetera, et cetera. welcome. it's good to have you back. one of your largest pog positios a approximately. >> sure. >> we just heard from carl icahn. what do you think about what he's doing? >> well, it earns lots of cash, selling at a low multiple. it's got a great eco system of products. so i think if someone offered you this whole company at these prices, you would think they were a little bit crazy. i think the stock is low and couple of things i've learned in my mid 50s, you know, one is i don't fight a land war in asia and another is didn't disagree with carl icahn and cnbc. >> almost one year ago today, as a matter of fact. probably two good things to learn. let's talk about what you do. this magic formula to investing.
people want to know what that is. >> well, first of all, it's not magic. it was a term i used in my book really to teach some simple concepts which is ben graham always said if you can buy it cheap, figure out what something is worse and pay a lot less. these are not pieces of paper that bounce around, these are companies. figure out what it's worse, pay a lot less. best student warren buffett made a twist that made him one of the richest people in the world. if i could buy good business cheap, even better. and so it was those two con accepteds that was, quote, unquote, magic. >> how does the market look to you today as we are all trying to figure out where we're going? >> we looked back over several decades of valuations and covered 3,000 largest companies in the u.s. in our research effort and big research team. so we do have a bottoms up standpoint. russell 1,000, stock number 1 to 1,000. right now we're in about the
38th percentile over our valuations. in the past when we've been at these valuation levels it's been up 10% over the next year. it's a different story for small caps. russell 2,000 is stocks number 1001 to 3,000. it's in the fitth percentile. it's been cheaper 95% of the time over the last several decades. and when it's been here in the past, the year forward return has been a negative 3%. so large caps have a little bit better prospects than small caps. these are the indexes. there are opportunities. >> ray of bridgewater was on cnbc from davos. i want to listen to that. i want to bring in anthony who i know that you know and i want to all of us to react to what he said. let's listen to that. >> financial assets went up a lot. as a result of them going up a lot, future expected returns went down a lot. so the return of equities has gone down to probably about 4%
and -- which is, by the way, in line with cash being about 1%, bonds be about 3%, return of equities about 4%. >> so i mentioned to anthony with us as well of sky bridge in davos. hold your thought for a second. joel, give me reaction of what dalio said first. >> it's not too far apart. he's probably thinking of the large cap universe. i said 6% to 10%. so not -- and that's because tin deckses are skewed. top 20 names in the s&p 500 are over 30% of the index. so if the apples of the worlds are the cheapest, if the microsoft of the worlds are the cheapest, if the googles are the cheapest stock out there, the index looks a little cheaper. overall, equally weighted index might be closer to what he's saying but we think higher. >> anthony, 30-second response as to if that is a prevailing thought out in davos? >> after he did the interview i
went back to '07 to '14 including that bear market. i'm sort of in joel's camp. i think ray is smarter than maybe the both of us combined. but i do think the markets are going to do is a little bit little better than what ray said this morning. >> anthony, we are pressed on time. see you thursday or friday. look forward to that. we will take a quick break. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness...
from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro.
if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.
coming up at the top of the hour on "power lunch," jim cramer. >> top of the hour. >> excellent. see you there. what more do we have to say? ty will join me at 1:00. jim cramer on 21 ceos worth betting on and their stocks. he gives his list. and cnbc is celebrating our 25th anniversary and one of the big things we're doing is listing the 25 most influential men and women in business. 200 people on the list so far. we need your help. debate the big names and narrow the list to 25 for us. counting down to super bowl xlviii here in new york. the team behind the big event joins us to talk about the preparations, the security. jets owner woody johnson joins us, giants co-owner jonathan tisch and al kelly. a lot more.
ask me what it's like to get your best night's sleep every night. [announcer] why not talk to someone who's sleeping on the most highly recommended bed in america? ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. [announcer] tempur-pedic owners are more satisfied than owners of any traditional mattress brand. tempur-pedic. the most highly recommended bed in america. now sleep cooler with extra cooling comfort on our bestselling tempur-breeze beds. visit tempurpedic.com to learn more, and find a retailer near you.
of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. ...and the little room above the strip mall off roble avenue. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪ i nethat's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. ah, actually i think my eyes might ha...
next! digital insurance id cards. just a tap away on the geico app. could save you fifteen percent or more on car insurance. everybody knows that. well, did you know that when a tree falls in the forest and no one's around, it does make a sound? ohhh...ugh. geico. little help here. getting the right nutrition isn't always easy. first, i want a way to help minimize my blood sugar spikes. then, a way to support heart health. ♪ and let's not forget immune support. ♪ but now i have new glucerna advance with three benefits in one. including carbsteady ultra to help minimize blood sugar spikes. it's the best from glucerna. [ male announcer ] new glucerna advance. from the brand doctors recommend most. advancing nutrition for diabetes. from the brand doctors recommend most. i'm bethand i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online
instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. [ male announcer ] once, there was a man who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame.
♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. welcome back. we will get some final trades from joel greenblatt. you own more than 300 stocks. we tried to narrow this down to a couple we wanted you to talk about. qualcomm and pepsi. why are you long those names? >> okay. well, pretty much everything we own is out of favor for one reason or the other. you know, qualcomm's a chip company. it is somewhat cyclical but there's a big move towards smartphones, even more and more smartphones and they are situated perfectly for that. pepsi, on the other hand, soda is not as popular, they have big competition with coca cola, but
there's a hidden, you know, strengths in their snack food businesses that aren't there. everyone knows their problems. they are out there. we're getting into a huge cash flow generator, huge returns on capital. these are attractive stocks and the odds say that with these type of stocks, we will do quite well. once again, we own over 300 stocks on the long and 300 on the short. >> 3d systems is one of the short. thank you for coming in. "power lunch" starts right now. "halftime" is over. the second half of the trading day starts now. >> indeed it does. it is a "power lunch" today that is full of numbers. we start with that number right there, 25. cnbc is officially celebrating our 25th anniversary starting right now, and one of the many things that we're doing is listing the 25 most influential men and women in business. that number, however, starts at 200. there are 200 men and women on our list so far, so we need your help to debate those n